When you leave school, you may need some time to find
the right job and perhaps move to a new place. So that you won’t
have to start making payments on your loan right after you leave school,
each of your Direct Loans has a six-month “grace period”
that starts the day after you stop attending school or you drop below
half-time enrollment. You don’t have to make payments during this
grace period; the DLSC will let you know when the grace period is coming
to an end and when you need to make your first payment. Interest does
continue to accrue on any unsubsidized loan.
You may choose one of the following repayment plans to
repay your loan:
| STANDARD |
Under this plan, you will make fixed monthly payments to repay
your loan in full within 10 years (not including periods of deferment
or forbearance) from the date the loan entered repayment. |
| EXTENDED |
Under this plan, you will make fixed monthly payments and repay
your loan in full within 12 to 30 years (not including periods of
deferment or forbearance), depending on the total amount of your
Direct Loans. |
| GRADUATED |
Under this plan, your payments will be lower at first and will
increase, usually every two years. You will repay your loan in full
within 12 to 30 years (not including periods of deferment or forbearance),
depending on the total amount of your Direct Loans. |
| INCOME CONTINGENT |
Under this plan, your monthly payment amount will be based on
your annual income (and that of your spouse if you are married),
your family size and total amount of your Direct Loans. As your
income changes, your payments may change. If you do not repay your
loan after 25 years under this plan, the unpaid portion will be
forgiven. You may have to pay income tax on any amount forgiven. |
If you don’t choose a repayment plan, your repayment
will be based on the Standard Repayment Plan. However, you may change
repayment plans at any time after you have begun repaying your loan.
Exact repayment schedules will not be provided until loan
repayment begins. Certain fees (the origination fee and, for loans borrowed
through the Federal Family Education Loan Program, an insurance fee)
will be subtracted from the loan amount before the loan is disbursed
but repayment of the full loan amount is required. Borrowers
must make payments on their loans even if you do not receive a payment
booklet or a billing notice.
Borrowers have an obligation to keep the DLSC informed
about address changes, or changes in enrollment. (Failure to notify
the DLSC is one of the most common reasons why a loan goes into default.)
Borrowers have an obligation to inform the DLSC when they
graduate, change schools, drop below half-time, or withdraw from school.
The borrower should also notify the DLSC in the event of a name change
(including the change of a last name through marriage) or a change in
social security number.
Borrowers should contact the DLSC if they are having difficulty
in repaying their loans; the DLSC may be able to suggest options that
would keep the loan out of default. Information about deferments and
forbearance is contained in the MPN.
Tax Incentives
Tax benefits are available for certain higher education
expenses, including a deduction for student loan interest for certain
borrowers. This benefit applies to all loans used to pay for post-secondary
education costs, including PLUS Loans. The maximum deduction is $2,500
a year. Internal Revenue Service (IRS) Publication 970, Tax Benefits
for Higher Education, explains these credits and other tax benefits.
You can get more information online at www.irs.gov or by calling the
IRS at 1-800-829-1040. TTY callers can call 1-800-829-4059.
Postponing Loan Repayment
(Deferment and Forbearance)
Under certain circumstances, you can receive periods of
deferment or forbearance that allow you to postpone loan repayment.
These periods don’t count toward the length of time you have to
repay your loan. You can’t get a deferment or forbearance for
a loan that is already in default.
Deferment
A deferment is a period of time during which no payments
are required and interest does not accrue (accumulate), unless you have
an unsubsidized Stafford Loan. In that case, you must pay the interest.
Qualification for Deferment
The most common loan deferment conditions are enrollment
in school at least half-time, inability to find full-time employment
(for up to three years) and economic hardship (for up to three years).
Deferment for Active Military Service
An active duty military deferment is available for loans
first disbursed on or after July 1, 2001. The deferment may not exceed
three years and is available only for periods when the borrower is serving
on active duty during a war or other military operation, or national
emergency or is performing qualifying National Guard duty under the
same circumstances. Therefore, not all active duty military personnel
are eligible for this new deferment.
** Loan Deferment Request Forms
should be completed in full and submitted to the Registrar, Betty
Burns. Students must provide the address where the Deferment Request
is to be returned.
Betty Burns is located in the James W. Murray Center, Room #206.
She can be reached by calling 812/749-1237, Monday-Friday, 8:00
am to 4:30 pm. |
Loan Deferment Summary Chart
| Deferment Condition |
Stafford Loans |
Perkins Loans |
| Direct Loans |
FFEL Loans |
| At least half-time study at a post-secondary school |
Yes |
Yes |
Yes |
| Study in an approved graduate fellowship program or in an approved
rehabilitation training program for the disabled |
Yes |
Yes |
Yes |
| Unable fo find full-time employment |
Up to three years |
Up to three years |
Up to three years |
| Economic hardship (Includes Peace Corps Service) |
Up to three years |
Up to three years |
Up to three years |
| Engages in service listed under discharge/ cancellation conditions |
No |
No |
Yes |
| Active Military Duty (for loans disbursed on/after July 1, 2001;
while borrower is on active duty during a war or other military
operation, or national emergency) |
Up to three years |
Up to three years |
Up to three years |
Forbearance
If you temporarily can’t meet your repayment schedule
but you’re not eligible for a deferment, your lender might grant
you forbearance for a limited and specific period of time. Forbearance
occurs when your lender or loan-servicing agency agrees to either temporarily
reduce or postpone your student loan payments. Interest continues to
accrue (accumulate), however, and you are responsible for paying it,
no matter what kind of loan you have.
Generally, your lender can grant forbearance for periods
up to 12 months at a time, for a maximum of three years. You’ll
have to provide documentation to the lender to show why you should be
granted forbearance. The lender must send you a notice confirming the
terms that were agreed to and record them in your file.
Applying for Deferment or Forbearance
Receiving deferment or forbearance is not automatic. You
or your parents must apply for it.
- Federal Perkins Loans- Contact the school that
made your loan or the school’s servicing agent.
- Direct Loans (includes Direct PLUS Loans)- Contact
the Direct Loan Servicing Center at: 1-800-848-0979,
TTY users should call 1-800-848-0983, or go to: www.dl.ed.gov
- FFEL Loans (includes FFEL Plus Loans)- Contact
the lender or agency holding your loan.
Regardless of which type of federal
student loan you have, you must pay the interest that accrues (accumulates)
during any period of forbearance.
Circumstances of a Mandatory Forbearance
There are certain mandatory forbearances. Examples include
borrowers who:
-
are in a medical or dental internship or residency;
-
have student loan payments that are 20 percent or
more of their monthly income;
-
have payments being made for them by the Department
of Defense
Contact your lender or loan-servicing agent for more information
on the mandatory forbearance benefit.
Consolidating Your Loans
Loan Consolidation
Student and parent borrowers can consolidate (combine)
multiple federal student loans with various repayment schedules into
one loan, either a FFEL Consolidation Loan or a Direct Consolidation
Loan, making a single monthly payment.
With a consolidation loan:
-
Your monthly payment might be lower.
-
You can take a longer time to repay (up to 25 years).
-
You will receive a fixed interest rate on your Direct
or FFEL Consolidation Loan.
Compare the cost of repaying your unconsolidated loans
with the cost of repaying a consolidation loan. Things to consider are:
-
Whether you’ll lose any borrower benefits if
you consolidate, such as interest rate discounts or principal rebates,
as these benefits can significantly reduce the cost of repaying your
loans.
-
Whether you might lose some discharge and cancellation
benefits if you include a Perkins Loan in your consolidation loan.
Carefully review your consolidation options before you
apply.
Talk to the holder of your loan(s) for more information
before you consolidate.
If you’re in default on a federal student loan,
you still might be able to consolidate if you make satisfactory repayment
arrangements on the defaulted loan or agree to repay the consolidation
loan under the Income-Contingent or Income Sensitive Repayment Plans,
provided the defaulted loan is not subject to a judgment or wage garnishment.
Types of Loans that Can be Consolidated
All federal student loans discussed in
this website are eligible for consolidation, and others can be included.
To get a complete list of your loans that are eligible for consolidation,
contact your lender or the agent servicing your loans(s).
If you’re applying for a:
When to Consolidate Loans
For both FFEL and Direct Loans you can consolidate:
-
During your grace period.
-
Once you’ve entered repayment (the day after
the end of the six-month grace period).
-
During the periods of deferment or forbearance.
How to get a Consolidated Loan
The Interest Rate on a Consolidate Loan
The interest rate for both Direct and FFEL Consolidation
Loans is a fixed rate for the life of the loan. The fixed rate is based
on the weighted average of the interest rates on all of the loans you
consolidate, rounded up to the nearest one-eighth of 1 percent. The
interest rate will never exceed 8.25 percent.
Disadvantages of a Consolidated Loan
Consolidating may significantly increase the total cost
of repaying your loans. Because there is a longer repayment period,
more interest will accumulate.
More Information on Consolidated Loans
Once made, consolidation loans cannot be revoked for any
reason because the underlying loans that were consolidated have been
paid off and no longer exist.
LOAN DISCHARGE OR CANCELLATION
Canceling or Discharging a Federal Student Loan
A loan can be canceled or discharged under rare circumstances.
It will release the obligation to repay the loan.
Your loan cannot be discharged or canceled because
you didn’t:
-
Complete the program of study at the school (unless
you could not complete the program because the school closed).
-
Like the school or program of study, or
-
Obtain employment after completing the program of
study.
Qualifications for Loan Discharge
Discharge refers to the cancellation of a loan, even one in
default, due to school closure, false certification, your death or total
and permanent disability.
Qualifications for Loan Cancellation
Cancellation or sometimes “forgiveness” of a loan
is based on the borrower performing certain types of service such as
teaching in a low-income school. A defaulted loan cannot be canceled
based on qualifying service (e.g. teaching).
How to Get a Discharge or Cancellation
After reviewing the conditions, if you think you qualify, you
must apply to the holder of your loan.
Discharging or Canceling Loans for Parents, Graduate,
and Professional Degree Students with PLUS Loans
These rules apply to Stafford and PLUS Loans (for parents and
graduate and professional degree students):
-
A PLUS Loan cannot be discharged because you or the
student didn’t complete your program of study at your school
(unless you or the student couldn’t complete the program because
the school closed).
-
A PLUS Loan cannot be canceled because you or the
student didn’t like the school or the program of study.
-
A PLUS Loan cannot be canceled because you or the
student didn’t obtain employment after completing the program
of study.
Stafford and PLUS Loan Discharge and Cancellation Summary Chart
Discharge/Forgiveness Condition |
Amount Discharged/Forgiven |
Notes |
| Borrower’s total and permanent disability or death* |
100 Percent |
For a PLUS Loan, includes the death, but not disability, of the
student for whom the parents borrowed. |
| Full-time teacher for five consecutive years in a designated elementary
or secondary school serving students from low-income families. Must
meet additional eligibility requirements. |
Up to $5,000 (up to $17,500 for teachers in certain specialities)
of the total loan amount outstanding after completion of the fifth
year of teaching.
Under the Direct and FFEL Consolidation Loan programs, only the
portion of the consolidation loan used to repay eligible Direct
Loans or FFEL Loans qualifies for loan forgiveness. |
For Direct and FFEL Stafford Loan borrowers with no outstanding
balance on a Direct or FFEL Loan on the date they received a loan,
PLUS Loans are not eligible. At least one of the five consecutive
years of teaching must occur after the 1997-98 academic year.
To find out whether your school is considered a low-income school,
go to www.FederalStudentAid.ed.gov. Click on the “Students,
Parents, and Counselors” tab. Or call 1-800-433-3243. |
| Bankruptcy (in rare cases) |
100 Percent |
Cancellation is possible only if the bankruptcy court rules that
repayment would cause undue hardship. |
| Closed school (before student could complete program of study)
or false loan certification. |
100 Percent |
For loans received on or after Jan. 1, 1986. |
| False loan certification now includes identity theft. |
100 Percent |
Effective July 1, 2006. |
| School does not make required return of loan funds to the lender |
Up to the amount that the school was required to return. |
For loans received on or after Jan. 1, 1986. |
* Total and permanent disability is defined
as the inability to work and earn money because of an illness or injury
that is expected to continue indefinitely or to result in death. If
you are determined to be totally and permanently disabled based on a
physician’s certification, your loan will be conditionally discharged
for up to three years. This conditional discharge period begins on the
date you became totally and permanently disabled, as certified by your
physician. During this conditional discharge period, you do not have
to make payments on your loan(s). To qualify for a final discharge due
to the total and permanent disability, you must meet the following requirements
during the conditional discharge period: (1) your earnings from employment
must not exceed the poverty line amount for a family of two; and (2)
you must not receive any additional loans under the FFEL, Direct Loan
or Perkins Loan programs. If you do not continue to meet these requirements
at any time during or at the end of the conditional discharge period,
your loan(s) will be taken out of conditional discharge status and you
must resume making payments on your loans. You cannot qualify for loan
discharge based on a condition that existed before the loan was made,
unless a doctor certifies that your condition substantially deteriorated
after you obtained the loan. For more information on qualifying for
this discharge, review your promissory note and Borrower’s Rights
and Responsibilities Statement or contact you loan holder.
STAFFORD LOAN FORGIVENESS PROGRAM FOR TEACHERS
For loans made under the Federal Family Education Loan (FFEL) Program
and/or the William D. Ford Federal Direct Loan (Direct Loan) Program
General Requirements
To be eligible to participate in the Stafford Loan Forgiveness Program
for Teachers, you must meet the following requirements:
-
You received a Stafford Loan through the Federal Family
Education Loan (FFEL) Program and/or the William D. Ford Federal Direct
Loan (Direct Loan) Program.
-
You are a new borrower. You are considered a new borrower
if you did not have an outstanding balance on an FFEL or Direct Loan
on October 1, 1998, or on the date you obtained an FFEL or Direct
Loan after October 1, 1998.
-
You have been employed for at least five consecutive
complete school years as a full-time teacher in an elementary or secondary
school designated as a low-income school. To find out whether your
school is considered a low-income school. To find out whether your
school is considered a low-income school, call 1-800-4-FED-AID or
visit www.studentaid.ed.gov and select Repaying. Click on Cancellation
and Deferment Options for Teachers then on Cancellation for Stafford
Loans.
NOTE:
All schools operated by the Bureau of Indian Affairs (BIA) are considered
low-income schools for teacher loan forgiveness purposes.
-
You are not in default on the loan for which you are
requesting forgiveness (unless you have made satisfactory repayment
arrangements with the holder of the loan).
-
You have not received a benefit for the same teaching
service through the AmeriCorps Program.
-
At least one of your five years of qualifying teaching
service must be after the 1997-98 academic year.
-
You received the loan for which you are requesting
forgiveness before the end of your fifth year of qualifying teaching.
Forgiveness Amount
You may receive up to $17, 500 in loan forgiveness if you were:
-
A highly qualified full-time mathematics or science
teacher in a secondary school; or
-
A highly qualified special education teacher whose
primary responsibility was to provide special education to children
with disabilities. In addition, you must have taught children with
disabilities that corresponded to your area of special education training
and demonstrated knowledge and teaching skills in the content areas
of the curriculum that you were teaching.
You may receive up to $5,000 in loan
forgiveness if:
-
Your five years of qualifying teaching service began
before October 30, 2004, and you were:
A full-time elementary school teacher who demonstrated knowledge
and teaching skills in reading, writing, mathematics, and other areas
of the elementary school curriculum; or
A full-time secondary school teacher who taught in a subject area
relevant to your academic major.
Applying for Loan Forgiveness
You must complete a Teacher Loan Forgiveness Application
and return it to the holder(s) of the loan(s) for which you are requesting
forgiveness.
The chief administrative officer of the school where you performed your
qualifying teaching service must certify on the application that your
teaching service met the requirements for the loan forgiveness for all
five years.
To obtain a Teacher Loan Forgiveness Application, contact
your loan holder.
To encourage individuals to enter and remain in the teaching profession,
the Teacher Loan Forgiveness Program grants loan forgiveness of up to
$17,500 for teachers in certain specialties and up to $5,000 for other
teachers who teach for five years in low-income schools and meet other
requirements.
FOR MORE INFORMATION
To find out more about the eligibility requirements for
teacher loan forgiveness, go to
www.studentaid.ed.gov and follow this sequence of steps:
For more details about other student aid programs for which you may
be eligible:
The Financial Aid Office is located in
the James W. Murray Center - Room #207
|
Office
hours:
8:00a.m. to 4:30p.m.
Monday - Friday |
Phone:
Toll-free 800-737-5125
812-749-1436
812-749-1224
Fax:
812-749-1438
|
Mailing
address:
Oakland City University
Attn: Direct Loan Processing
138 North Lucretia Street
Oakland City, IN
47660-1038 |
